The announcement of Libra, Facebook’s very own cryptocurrency has driven the FinTech world into a frenzy.
Although there is nothing revolutionary about Libra as far as the technology is concerned, the entry of a GAFA company into the industry could be enough to cause significant disruption both to the cryptocurrency markets and the global economy.
Beyond this, Libra is unique among cryptocurrencies. There has been an enormous amount of money that will be poured into the project by the 28 founding members of the Libra Association, each contributing at least $10 million to run a node.
Wide Eyes of the Seven
With a scale this large, the project has already begun to attract the attention of regulators and governments, who want to ensure the coin does not overstep its bounds.
According to Reuters, the Swiss Financial Market Supervisory Authority (FINMA) is already in contact with the Facebook subsidiary Calibra, though FINMA has not yet provided details on exactly what the topic of discussion is.
Similarly, the Group of Seven (G7) nations have taken notice and reportedly launched an investigation into how cryptocurrencies might affect the traditional economy. The primary concern raised by the G7 relates to money laundering, with the coalition looking to ensure that the cryptocurrency has adequate controls to prevent this.
In contrast, Federal Reserve Chairman Jerome Powell recently stated that he believes cryptocurrencies are still some way from impacting monetary policy.
No Open Doors for Libra
Since Libra is a masternode coin, some think it will be almost entirely controlled by a conglomerate of the 28 early investors from the Libra association. This will likely be a bone of contention for regulators, who will almost certainly want a say in matters.
Since the International Monetary Fund (IMF) is tasked with ensuring financial stability and providing policy advice to governments, the task of helping to direct Libra will likely fall on the IMF. However, the extent to which the IMF can influence the direction of a digital currency like Libra remains to be seen.
Bank of England Governor Mark Carney stated that regulators will not give Libra an open door, it is likely that more than a few hurdles lie in wait for the new global cryptocurrency.
With that said, Mark Zuckerberg has defined a very simple goal for Libra — to bank the unbanked. With the immense combined reach that Facebook, Whatsapp, and Instagram have, there is a very real possibility that Libra could become a big part of people’s everyday finances.
Being backed by Facebook and dozens of large corporations, it is hard to imagine that Libra will be anything but 100 percent compliant with applicable laws and regulations. Whether it actually manages to bank the unbanked, is less of a certainty.
Do you think Facebook’s Libra cryptocurrency will improve or worsen crypto regulations? Let us know your thoughts in the comments below!